SINGAPORE (May 22): Phillip Capital, Maybank KimEng and UOB KayHian all have “buy” calls on Health Management International after 3Q19 revenue rose on the back of resilient patient load growth and increasing average patient bill size.

According to Phillip, HMI’s average inpatient and outpatient bill size rose 4.9% and 5.3% y-o-y respectively due to the expansion of specialist offerings, further developments of HMI’s Centres of Excellence (COE), investments in specialised medical technology and recruitment of more specialists and sub-specialists.

In addition, bed occupancy rose to 61% from 59% a year ago despite the total number of operational beds remaining the same at 437.

Maybank believes both HMI’s hospitals, RSH and MMC, are well positioned to benefit from rising incidences of chronic diseases; rising insurance takeup rates; and overburdened public healthcare system.

Furthermore, RSH stands to gain from the nearby Petronas Rapid project in Johor which could create more than 50,000 jobs when completed. When the new extension block is commissioned in 2021, RSH will increase to a 380-bed hospital from 218 currently.

And as bill sizes at MMC and RSH are 33% of those in Singapore, Maybank’s price-elastic medical tourists may favour treatment in HMI’s Malaysia-based hospitals than Singaporean ones.

In addition, MMC has cultivated a strong reputation in Indonesia, having pioneered medical tourism in Malaysia as early as 1999. Today, MMC is a leader in medical tourism with an estimated 8-10% market share in Malaysia.